This question is often asked by Landlords who have recently bought or acquired a property with a tenant already in residence and they either want to regain possession of the property or have the tenant live in the property on “their” terms.
Basically, if there is a tenant already in the property you have acquired and there is an existing lease in force then the answer is “yes” you must honor the terms of the existing lease in place, certainly until it expires.
There are a couple of points to consider here as to which is the best way for you to proceed.
Renew the Tenant:
If the resident / tenancy you have taken over is good and pays their rent on time and otherwise a desirable tenant to keep, then upon lease expiration; that is your time to issue them with a new lease on your terms and with your conditions for residency. The old lease would therefore naturally cease to be at the expiration date. The tenant may or may not accept your new terms but if they do and they execute your new form of lease for future rental periods, then you have them on the terms you require. Your new lease terms should be substantially the same or similar to what they have had before to ensure the maximum chance they will continue with the Residency moving forward. Major changes are likely to be red flags to them to move.
Give notice to vacate/notice of non-renewal:
If the options in point #1 above are not acceptable to the tenants and they will not extend their lease on your terms, then you should give them written notice to vacate/non lease renewal per the terms of the EXISITING lease (the one you inherited). You cannot use terms other than that for them to leave and you not renew the tenancy, since that existing lease is the governing document until it expires. Upon the lease expiry and the tenant therefore leaving, you regain possession of the now vacant unit and you are free to re-advertise it and obtain a new tenant and on your own specific rental terms and the lease you want to govern those terms.
You want possession of the property for your own reasons:
Similar to point #2 above you would use the terms of the inherited/existing lease to provide the relevant notice period for the tenant to not be extended or not renewed and instead of re-advertising the unit for a new tenant, you simply take possession back for your own usage or reasons. At this point you would be free to do whatever you wish with the unit, which may include, renovation, resale (if you had bought the unit as a possible “flip” or “renovation project”
Some added tips regarding these points:
Return of Possession Form
If the tenant is to vacate the property and leave, either for non-renewal or they simply wish to move elsewhere; ALWAYS get the tenant to sign a “return of possession” form, which formalizes the date and the fact the tenant is returning legal possession back to you. This provides a clear “handover” date and thus acts as the arbiter in the event of future claims of matters relating to the property either before or after the tenants held occupancy. Part of that return of possession process will include the return of keys, garage remotes and so on and will be addressed in the Owner Learning Center elsewhere.
Move Out Inspection
Always perform a move out inspection within 2 days of the tenants leaving the unit so you can gather relevant information, photos and evidence to prepare a correct and timely Settlement Statement/Claim on Deposit to the former tenants.
New Lease / Renewed Lease
If you wish to offer new lease terms or a new lease period to the inherited tenants; obtain a proper, full lease, from a specialist real estate attorney who is familiar with residential leases and the current landlord and tenant laws. These laws do change fairly frequently and thus a good, strong and current lease document is vital to protect you as landlord. For the landlord who has multiple rentals or holds rental properties for the long term it is vital to build a relationship with a qualified real estate attorney as inevitably there will be leases, legal documentation and possible evictions required over an extended period of time .
Tenants’ Security Deposit
Upon inheriting an existing lease, pay particular attention to whether there is a security deposit mentioned on behalf of the tenant in that lease document. If there is, you must obtain that security deposit from the previous property manager/seller/title company or wherever it was previous held and notify the tenant of where you are holding it in future and if in an interest bearing account or not. This can be done by way of an addendum to the lease and referencing the relevant banking institution and address. Thus ensuring compliance with the required landlord and tenant law by notifying the tenant.